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When a pension holder dies, the pension trustees decide who receives the death benefit — typically a lump sum or ongoing pension payments for dependants. Trustees have legal discretion over who receives the money, but they almost always follow the deceased's expression of wishes (nomination form). Pensions currently sit outside the estate and outside probate, making them one of the most important financial assets to handle correctly after a death.
Pensions are often the largest financial asset a person leaves behind, yet many families do not know how to claim them or even that they exist. Unlike bank accounts and investments, pensions do not automatically go through probate. Each pension must be claimed separately from the pension provider, and the rules differ significantly depending on the type of pension and whether the deceased had completed a nomination form.
Most pension schemes allow members to complete an "expression of wishes" form (sometimes called a nomination of beneficiaries form), which records who the member would like to receive their pension death benefits. This is one of the most important financial documents a person can complete during their lifetime.
It is crucial to understand that the expression of wishes is not legally binding. The pension trustees have discretion to pay the death benefit to whoever they consider appropriate under the scheme rules — they are not legally obliged to follow the nomination form. However, in practice, trustees almost always follow valid, recent nominations, particularly when no disputes exist between potential beneficiaries.
Trustees consider the expression of wishes alongside other factors, including the deceased's personal circumstances at the time of death (e.g. whether they were separated but not divorced from the nominated person), the financial needs of potential dependants, and any information provided by family members.
The practical implication: if the deceased had an out-of-date nomination form (for example, nominating an ex-spouse after a divorce), the trustees would take this into account and likely pay to current dependants instead. Always encourage family members to keep nomination forms current.
Key fact about pensions and wills:
A will does not control who receives pension death benefits. Even if the will leaves everything to one person, the pension trustees can and will pay the death benefit to the nominated beneficiary (or whoever the trustees determine is appropriate under scheme rules). Pension death benefits are separate from the estate.
At present, pension death benefits sit outside the deceased's estate for Inheritance Tax purposes. This means they are not subject to the 40% IHT charge that applies to assets above the nil-rate band threshold. This is one of the most valuable tax advantages available to UK savers and is why many financial advisers recommend funding pensions heavily in later life.
However, this is set to change. The UK government announced in the Autumn Budget 2024 that unused pension pots will become subject to Inheritance Tax from April 2027. Under the proposed changes, pension pots that are left unused at death and passed on to beneficiaries will be included in the taxable estate.
Until April 2027, the current rules apply: pension death benefits are outside the estate and bypass probate. This guide reflects the law as it currently stands.
Contact the pension provider or scheme administrator directly and ask whether a nomination form is held on file for the deceased member. You will need to identify yourself as the executor (or next of kin if no executor has been appointed) and provide a copy of the death certificate.
The pension provider will then initiate their death benefit claim process. As part of this, they will:
If you are not aware of all the pension schemes the deceased belonged to, use the government's free Pension Tracing Service (pensiontracing.service.gov.uk) to search for lost or forgotten pensions using the deceased's name and National Insurance number.
If the deceased did not complete an expression of wishes form, the trustees must exercise their discretion entirely based on the scheme rules and their own assessment of who should benefit. In these situations, they will usually:
Where the trustees pay to the estate, the death benefit loses its IHT exemption and is taxed as part of the estate. This underlines the importance of keeping nomination forms current.
Many families deal with multiple types of pension benefit simultaneously. Each has different rules:
Contact the pension provider to clarify which type of benefit is available and what documentation they require. Each benefit type may require a separate claim process.
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